TRANSCRIPT

JUDY WOODRUFF: Our lead story, President Obama met one on one with world leaders in London today, as protesters thronged the streets. It was the eve of the Group of 20 summit of economic powers.

NewsHour correspondent Kwame Holman has our report.

KWAME HOLMAN: The Obamas’ motorcade arrived at 10 Downing Street this morning, an early start to a long day of meetings on the global financial crisis and other issues.

The first session was with British Prime Minister Gordon Brown and his team. Another meeting with Russian President Dmitry Medvedev brought a new pledge to slash nuclear weapons.

U.S. PRESIDENT BARACK OBAMA: I think that, over the last several years, the relationship between our two countries has been allowed to drift. My hope is that, given the constructive conversations that we’ve had today, the joint statements that we will be issuing, both on reductions of nuclear arsenals as well as a range of other areas of interest, that what we’re seeing today is the beginning of new progress.

DMITRY MEDVEDEV, president, Russia (through translator): I can only agree that the relations between our countries have been adrift over the past years. As President Obama has said, they were drifting, and drifting in some wrong directions. They were degrading, to some extent.

That is why we believe that, since such a situation was not to the benefit of the United States or Russian Federation, to say nothing about the global situation, we believe that the time has come to reset our relations.

KWAME HOLMAN: As part of that reset, Mr. Obama agreed to visit Moscow this summer. Later in the same room, he met with Chinese President Hu Jintao and agreed to visit China later in the year.

BARACK OBAMA: I said publicly — and I continue to believe — that the relationship between China and the United States is not only important for the citizens of both our countries, but will help to set the stage for how the world deals with a whole host of challenges in the years to come.

KWAME HOLMAN: Afterward, Chinese and American officials faced each other across a table. They agreed on continued talks about a range of issues, including North Korea and economic policy.

The push for economic unity was the president’s theme with Prime Minister Brown. The U.S. has pressed for more stimulus spending, while France and Germany want greater financial regulation.

BARACK OBAMA: I came here to put forward ideas, but I also came here to listen, not to lecture. Having said that, we must not miss an opportunity to lead, to confront a crisis that knows no borders. We have a responsibility to coordinate our actions and to focus on common ground, not on our occasional differences. If we do, I believe we can make enormous progress.

French president backs off threat

KWAME HOLMAN: And the British leader dismissed fears that French President Nicolas Sarkozy would make good on a threat to walk out.

GORDON BROWN, prime minister, Britain: I'm confident that President Sarkozy will not only be here for the first course of our dinner, but will still be sitting as we complete our dinner this evening. And I think, as President Obama has said, look, never before has the world come together in this way to deal with an economic crisis.

KWAME HOLMAN: Later, Sarkozy appeared with German Chancellor Angela Merkel. He voiced confidence in President Obama, but did not repeat his threat to quit the talks.

NICOLAS SARKOZY, president, France (through translator): This has nothing to do with ego or temper tantrums. This has to do with whether we are up to the challenges ahead or not.

Of course we have to make compromises. We're in Europe, and that's why we've built the European Union. But compromise has to be engaged in by all regions of the world, especially as the crisis didn't actually spontaneously erupt in Europe.

KWAME HOLMAN: Chancellor Merkel said she does not want results that have no impact in practice, but she voiced hope.

ANGELA MERKEL, chancellor, Germany (through translator): I think there are definitely chances for us to move forward here in this area, which is important to us. We have seen with satisfaction that there is now a great deal of talk about regulation in the United States.

KWAME HOLMAN: The mood was far more combative in the city, London's financial district, where 4,000 protesters massed at the Bank of England and the Royal Bank of Scotland, which had to be bailed out by the British government last fall. The crowds smashed windows and chanted "Storm the banks!" and "Shame on you!"

Police fought to contain the violence and arrested a handful of protesters, but that was miles from Buckingham Palace, where President Obama and his counterparts gathered with Queen Elizabeth II for a group photo.

Later, the leaders concluded their day with a working dinner back at Downing Street.

Discussing arms control with Russia

Margaret Warner

NewsHour Senior Correspondent

President Obama wanted to use this meeting not just to advance the G-20 economic agenda, but also to try to set up relationships that would help the U.S. on the big issues, other issues that it wants to make progress on in the future.

JUDY WOODRUFF: Margaret Warner is in London covering the summit for us. Ray Suarez talked with her this evening from outside Buckingham Palace.

RAY SUAREZ: Margaret, welcome.

Was President Obama's meeting with the Russian president almost a throw-back to the days when arms control was the centerpiece of the Soviet-American relationship?

MARGARET WARNER: Yes and no, Ray. President Obama wanted to use this meeting not just to advance the G-20 economic agenda, but also to try to set up relationships that would help the U.S. on the big issues, other issues that it wants to make progress on in the future, say Iran and Afghanistan.

So on all those kinds of issues, Russia and China are absolutely key, their cooperation. And it's in that context that the Obama folks are looking at this agreement to go forward on a new strategic arms reduction treaty.

They also want to -- they want to demonstrate that President Obama can do business with any country on issues in which they agree, even if they disagree on others. And, also, they wanted to send a signal to Iran and others in the world that the U.S. and Russia still take arms control seriously and still take the whole idea of nonproliferation seriously.

So, yes, it's important with arms control, but it's also got a broader message.

RAY SUAREZ: Well, what did the Russians say about Iran that signaled that there may be less daylight than others may have thought between the United States and Russia on that topic?

MARGARET WARNER: Well, that's not clear. I can tell you what the joint statement said, which said that Iran -- they agreed that Iran has to demonstrate the totally peaceful intentions of its program.

So a senior administration official said -- I said afterwards to one, well, how should Iran read that? And he said, "Iran should be nervous. This was intended for Iran." And he said it was intended to show that Russia agreed that Iran should not have nuclear weapons.

Now, if Iran reads it that way remains to be seen, and what also remains to be seen is whether Russia would be ready to take the next step, which is, if the diplomatic track didn't bear fruit, then tougher sanctions? I'm told that President Obama did not ask for that kind of commitment and none was given. So it remains an open question.

U.S.-China relations

Margaret Warner

NewsHour Senior Correspondent

This dialogue that Treasury Secretary Hank Paulson had with the Chinese senior economic officials has now been expanded to a strategic and economic one and it will be led by Secretary of State Clinton and Treasure Secretary Geithner.

RAY SUAREZ: The president of the United States also met with the Chinese leader, Hu Jintao. What news came out of that encounter?

MARGARET WARNER: I'd say, Ray, that was less -- certainly less lively, it sounds like, less lively encounter and maybe less was accomplished. They spent an hour and, with translation, that's a half-hour. And each kind of stated their positions on a whole lot of issues.

The one -- but, again, China is key for the U.S. on both financial and economic issues and also all these other ones we've talked about.

So I'm told that -- I mean, we're told -- I mean, it came out in a statement -- that the big, new thing is that this dialogue that Treasury Secretary Hank Paulson had with the Chinese senior economic officials has now been expanded to a strategic and economic one, and it will be led by Secretary of State Clinton and Treasure Secretary Geithner, and that it sounds like they're going to do it at the same time together with very senior Chinese leadership, including a deputy prime minister.

So the Obama administration is encouraged by that, because that means that they won't just be talking on the economic track, but on these other issues that the U.S. cares about, it will all be of a piece.

Otherwise, we're told that President Obama stated, you know, his views on all these range of issues, as did the Chinese, and they pledged close cooperation on North Korea, on Iran, on Sudan. I mean, they mentioned those by name.

But, again, President Obama did not ask for any commitment that China would stand behind the U.S. in the Security Council for punitive measures, but he did make clear that, for instance, if North Korea goes ahead with this missile launch or if Iran, again, does not pursue the diplomatic track that the U.S. would come to the Security Council to try to get some sticks.

European criticism of the U.S.

Margaret Warner

NewsHour Senior Correspondent

The Europeans are somewhat preaching to the choir, in terms of the need for more regulation. It's just they do have a difference on the nature of the regulation.

RAY SUAREZ: In the days leading up to the G-20 summit, there was some tough talk from America's European friends about the United States role in precipitating the global financial crisis. How has the president handled that upon his arrival in Britain?

MARGARET WARNER: He's gone out of his way, Ray, not to be at all defensive about that. In fact, in the press conference he had this morning with Prime Minister Gordon Brown, he made a point of saying that the U.S. had been through this period of extreme irresponsibility, that we could not return to the kind of risk-taking that the previous regulatory system had allowed.

Then, when he was pressed by a BBC reporter on that very point, he said, you know, essentially, I'm the first to acknowledge that we had a regulatory system that had not kept up with the way the global financial market had become an integrated market, but he said, you know, the U.K. and the continental Europeans hadn't either.

So, in that sense, the Europeans are somewhat preaching to the choir, in terms of the need for more regulation. It's just they do have a difference on the nature of the regulation.

RAY SUAREZ: But have the Europeans made a concrete proposal, either in London or beforehand, about how to respond, regulatory sense?

MARGARET WARNER: Not on the really big issue that separates them, which is that the Europeans, the continental Europeans, French and Germans, would actually like to have some kind of global regulator.

And I don't think there's ever been actually a proposal from them for that. In fact, the Europeans don't even have a global regulator. It's still left up to the central banks and other authorities in every country.

However, Merkel and Sarkozy, that is, Chancellor Merkel and President Sarkozy of France, had a press conference this afternoon, a joint one at a London hotel. I think you're showing this in your setup piece, where they struck this sort of defiant tone and said, "We want tougher regulations of tax havens and hedge funds and derivatives."

I just spoke to a senior Obama official who said, "I don't hear of anything they want on those fronts that we're not willing to do." So it's unclear whether they're trying to make it clear to their own constituents that the U.S., that this new American president hasn't snowed them or whether they are trying to send a signal that we have to act now and get as tough regulation as we can while the world is really seized with how serious the situation is.

But I think tomorrow they're going to get a deal without too much trouble. One interesting tidbit is right now the dinner is going on at 10 Downing Street, and apparently President Obama was seated next to Angela Merkel, so something may come out of that.

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